BROWN AND ROOT INC. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) MAZAGAON Dock Limited of India (MDL) was awarded a contract by the Oil and Natural Gas Commission (ONGC) for the installation of sub -sea gas pipelines including the 12" SHG gas pipeline (SHG pipeline) to be laid down between B121 platform and the SHG platform, offshore India. For the execution of the said contract, MDL sub -contracted a part of the installation work of the SHG pipeline to Hyundai Heavy Industries Co. Limited (HHI). For the purpose of execution of its contract with MDL, HHI sub -contracted a part of the installation work of the SHG pipeline to Brown and Root Inc. (BRI).

(2.) THE applicant, Brown and Root Inc., is a company duly incorporated and existing under the laws of the United States of America, with its office at 1209, Orange Street, Wilmington, Delaware 19801, United States of America. During the previous year ending on March 31, 1991, BRI had entered into a contract with HHI in relation to the installation of the 12" SHG gas pipeline between the B121 platform and the SHG platform offshore India by mobilising the eight point mooring vessel "Subtec 1" and the test support vessel "Captain BO". It was completed in 39 days from the date of commencement, i.e., from November 30, 1996 to January 7, 1997.

(3.) AN agreement for Avoidance of Double Taxation exists between India and the United States of America (hereinafter called as "DTAA"). It is contended by the applicant in its statement containing interpretation of law and facts that where there is such an agreement, the provisions of the DTAA will prevail over those contained in the domestic laws of both the countries, if the provisions of the DTAA are more favourable to the asses -see. In this connection, it has relied on a judgment of the Andhra Pradesh High Court in CIT v. Visahhapatnam Port Trust [1983] : 144 ITR 146. Reliance has also been placed on section 90(2) of the Income -tax Act, 1961, inserted by the Finance (No, 2) Act, 1991, which reads as under : "Where the Central Government has entered into an agreement with the Government of any country outside India under sub -section (1) for granting relief of tax, or, as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee."